Kilroy Realty Corp.
), a real estate investment trust (REIT), has recently signed a
lease agreement with salesforce.com, a premier cloud computing
company, to fully lease an under-construction building in the
heart of San Francisco's South of Market financial district
popularly known as SoMa. The office tower is arguably the first
new office high- rise development in the city since 2008. The
deal was put on paper for an undisclosed amount.
KILROY REALTY (KRC): Free Stock Analysis
MPG OFFICE TRST (MPG): Free Stock Analysis
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Ever since Kilroy had acquired the site in October, it had
witnessed huge customer interests from a large pool of companies,
including both technology and non-technology related industries.
Total development cost for the 27-story building is estimated to
be approximately $250 million and could further escalate by
approximately $25 million. With the proposed building, the
company would own 2.6 million square feet of office space in the
region that is home to major software and technology companies of
The lessee would occupy 445,000 square feet of space in the LEED
(Leadership in Energy and Environmental Design) Platinum designed
property. LEED is an internationally recognized third-party green
building certification system, which ensures that a building is
designed and built for environment-compatibility, providing a
healthy work environment and reducing operating costs. The
projects are judged on six parameters, including Sustainable
Sites, Water Efficiency, Energy & Atmosphere, Materials &
Resources, Indoor Environmental Quality, and Innovation in
The number of points earned by a project determines the level of
LEED Certification it receives, which is currently available in
four progressive levels: Certified: 40 - 49 points; Silver: 50 -
59 points; Gold: 60 - 79 points; and Platinum at 80 points and
above. The leased building is designed to incorporate
state-of-the-art sustainability practices and energy-efficiency
standards that are expected to earn it LEED Platinum
certification. In such a scenario, the building would reportedly
be the first ground-up commercial development property in San
Francisco to achieve it.
Kilroy owns, develops and manages a diverse portfolio of office,
industrial and multi-purpose real estate properties primarily in
the coastal regions of Los Angeles, Orange County, San Diego,
greater Seattle and the San Francisco Bay Area. As of September
30, 2012, the company owned 12.7 million rentable square feet of
Kilroy maintains an active multi-year development program focused
on the economically dynamic locations characterized by strong
long-term demand, limited supply, and high barriers to entry. As
such, most of the properties of the company are concentrated in
the coastal submarkets of Southern California that offer both a
vibrant economic backdrop for businesses and a unique quality of
life for their employees.
Currently, we have a Neutral recommendation and a Zacks #2 Rank
for Kilroy that translates into a short-term Buy rating. We have
a Neutral recommendation and Zacks #3 Rank (a short-term Hold
MPG Office Trust, Inc.
), one of the competitors of Kilroy.